PodcastSourcing For Amazon

Today’s Shipping Obstacles When Sourcing Products For Amazon – EP 17 With Kian Golzari

By November 2, 2021 No Comments
 

Welcome to Branded By Amazing Ep 17

Mike McClary: Hey there. Welcome to episode 17 of branded by amazing. I’m Mike McClary. I’m the chief product officer at amazing.com. Today we’re lucky to have the most premier sourcing and shipping expert that I’ve ever gotten the chance to personally know and kind of see, speak on stage and teach other people everything he knows about sourcing and shipping. And we’re lucky to have him with us here today.

He is the owner and founder of sourcing with Kian and works with a lot of other industries and other businesses, including us here. And so we’re happy to bring them on. So I want to welcome Kian Golzari. Welcome to the podcast. How are you doing?

Kian Golzari: I’m great. I’m great. Thanks Mike. Thanks very much for having me on it’s that it’s a pleasure and glad to be here.

Mike McClary: Yeah. We’re, we’re excited to have you on, especially given kind of the timing of what’s going on in the world right now with shipping. But first, why don’t you kind of tell everyone what is it exactly that you do and what kind of brought you to this place in your life

Kian Golzari: right now?

Sure. I mean, luckily I’ve been involved in sourcing and manufacturing, like my entire professional life and how I sort of jumped in. It’s the, I grew up in a, in a family business. And, you know, from when I was like five years old, my dad was going to China because he was starting his business and he sort of, he started off with a store and then he was like, well, I understand goods are made in China.

I want to understand that better. So I’m just going to go straight to the source and figure it out. And this was when China was just sort of coming out of like a communist rule. And these factories were just sort of developing privatized for the first time. And he was sort of helping those factories build up to say like, oh, Hey, this is how we make goods in the west.

And then they’re like, okay, cool. And then they just started working together and really helping each other. And then when I was five years old, I had like Chinese factory owners, like come to me. In Scotland. And like, so literally I grew up in this environment. So as a kid I just learned a lot about Chinese culture and I was just so curious as well.

Like, you know, what goes on over there? How are the products made? And then luckily, when I graduated university, the first thing I did was go to China with my dad. Then he took me to the cans on ferry, took me to loads of factories and it just kind of blew my mind because I was curious about. My entire life basically.

And what was supposed to be a two week trip was I canceled my flight home. I stayed there for three months. I set up an office there, went back home to get my things and then moved back to China and lived there. Full-time and in that time I developed over two and a half thousand products visited more than 500 attended, more than 20 accounts on fairs.
And, you know, I was supplying family businesses, family brand, as well as a lot of retailers licenses. The Olympics, the MBA, the United nations. And that really just comes down to, you know, being able to source the best possible product from the best factory, at the best price. And then you’re able to display anyone.

Right. And that really just came from the knowledge and the team that had spent there. And in the last sort of three or four years, we’ve just been speaking on stages about sourcing, you know, setting up a YouTube channel Facebook group, just helping people and then just helping. E-commerce and Amazon sellers, because now it’s the Amazon sellers, which have gotten the gigantic orders in which you’re overtaking, you know, traditional retail as well.

So it’s, it’s been a pleasure to work with many different types of e-commerce sellers as well. Wow.

Mike McClary: That’s incredible. You know, kind of joking earlier before the podcast that you, you know, what brought you here, you probably didn’t grow up wanting to be a sourcing expert, but I was wrong. Sounds like you did.

And how old were you when you took that first trip to China and decided.

Kian Golzari: 21.

Mike McClary: Oh, wow. And then that’s the one you decided stay there for three months and kind of make a business out of

Kian Golzari: it. Exactly. It just sparked my curiosity because like, from the age of five, but just so my dad come home from all these channel trips and he’d always bring these cool gifts from China.

Like these nice, these cool paintings. It’s like Teddy bear pandas, these oddly shaped rocks and then like products from the factory is just full of samples. I was just so curious. I was like, I’ve got to go there. And then when I went, it blew my mind and the cool thing was. At that time and China still is going through like a massive growth, right?

So every six months you would see like a new highway, a new airport and you five-star hotel new factories. And it’s just like Western bars, nightclubs, restaurants. It was just, everything was growing. And then you sort of became like addicted to that growth mindset. And then you come back home. Like I grew up in Edinburgh, Scotland, which is a lovely place, but everything’s the same, same people.

Same right. And then you go back to China, boom, boom, boom. Everything’s growing again. So it was almost like big enough to be there. Right. Because then you’re part of the growth and it just sparked this crazy journey for me.

Mike McClary: Yeah. You know, that’s, that’s interesting to think about, because I have yet to be to China or to head over to China.
And I never really think about that. And most people who sell on Amazon they’re on e-commerce sites, haven’t been there. Probably don’t see all the growth that you’ve been able to see and experience firsthand.

Kian Golzari: Yeah, I mean, super lucky and it’s not only on the manufacturing sites, but it’s also just in the country in general.

And then, you know, a lot of people see how powerful China is in the world today, but I could kind of see this coming from like 15 years ago and that they have a much more longer term long-term approach in terms of how they want to grow and build their country and economy compared to sort of the states where it’s kind of like turn by term four years precedent, right?

This is what we want to achieve, or I president’s out, they’re going to start from zero and you can kind of see how. Grown so much because of their one party policy, but Hey, we’re not here to talk about politics. No.

Shipping Industry Currently

Mike McClary: You know, and I’d love to talk to you more about sourcing. I know that you like you are of all the people that I know, the, the expert in sourcing and I think we’ll do a future podcast on that as well.

Cause I know that. An entire session or two about it. But what I wanted to really talk to you about today, because it’s so timely and topical is what’s going on in the shipping industry. Can you explain a little bit for our listeners out there who may be selling on Amazon selling on their own website or looking to do that?

Can you tell them what’s kind of going on with shipping the may have read something on the news, but what’s happening in the shipping. For sure.

Kian Golzari: For sure. So if we take a step back right prior to let’s just call it the situation it was always, shipping was always pretty stable, right? Your container prices tend to be, you know, two, $3,000 a container, depending if you’re shipping a 20 foot or 40 foot.

And it was relatively stable. The price didn’t fluctuate too much. No. During the, the, this situation, the pandemic, like the prices start to skyrocket. We were used to seeing like $3,000 and was going up to eight, then 10, then 12 and 15. And then people were even getting prices of $20,000 per container, even when I was like $24,000 to container.

And imagine what that does to your margins. Like if you can fit 1000 units in a container and you’re paying $3,000 for that, you’re paying $3. For your shipping, but now if it goes up to $20,000, you’re not paying $20 per unit, which greatly affects the margin of your product. And how does happen? Like how did we get here?

Well, it was really just like the positive cases that we experienced here in the U S so there’s a positive case. The closer warehouse, right? It’s is an outbreak. We have to close it down, test everyone. And then once we have all those negative tasks, then we can reopen. So the shipments are coming to the ports in the U S the LEP.

And they’re piling up because the warehouses are closed because they’re not unloading containers because there’s positive cases. And then as a result of those containers piling up, it now starts to mess up the circulation because what used to happen shipment comes container comes, gets unloaded. The empty container gets shipped back to China.

It gets filled up again, and these containers are just in constant circulation, but with them getting stuck in the states or. Those empty containers are no longer going back to China, but e-commerce demand and production demand is skyrocketing because now we need, you know, home goods, office goods, gardening goods, sport, fitness goods.

So the production demand is spiked, but then the empty containers are not there. So we have this increased demand and decreased supply, which. Gradually gradually, gradually just kept putting the prices up. Even I was flying a few weeks ago from LA to Scottsdale Arizona, and we flew over long beach port.

And I personally saw with my own eyes, like over 50 containers, just waiting at the port and I’ve got, I took a photo on my phone. I’m not sure if you can see it there, but you’ve got like 50 vessels and each vessel here. I can hold up to 10 to 20,000 containers. So in that one picture, we’re looking at 500,000 to a million containers, which are just sitting at the port waiting to be unloaded.

So, you know, you were expecting your goods, transit time to be, you know, 15 days or 30 days from China. We’re stuck there at a port for three or four weeks. And that’s really what caused the problem. And also we had poor closures in China as well. And Ningbo port was closed for a couple of weeks as well because of you know, outbreaks going on there.

But that’s basically the picture and that’s how the prices have gone up. But there’s also now a few things we can do about it in order to gain an advantage because some people just give up and they’re like, well, My product isn’t profitable anymore because the shipping cost is too high. So I’m not going to develop this product or I’m going to stop selling, but that’s an actual fact, you know, with every problem, there’s an opportunity, right?

So let’s now focus on the opportunities that are present and how we can now get an advantage over, over other things. The first thing I would want to distinguish is that it’s very, very important to understand the difference between a freight forwarder and a shipping line. The shipping lanes are the ones which own those massive vessels and they’re companies like Mercer, Costco, evergreen MSC, but then the freight forwarders boot containers on those shipping lanes and they’ll book like a hundred containers or 500 containers, you know, they store up to 20,000 containers.

They’ll just boot, however many containers they need to every week. From Shan, Shanghai, Schengen, Ningbo, wherever it may be at to LA, to Houston, to New York. And a lot of people have this misconception that, oh, the freight forwarders are just trying to put the price up. They just want to make up for lost margin.

From previous years, they’re actually making crazy profits, but that’s really not the case. It’s the shipping lanes with limited capacity. The freight forwarders are actually really trying to help us. And they’re actually getting a lot of abuse because I’m friends with a lot of freight forwarders that I’m on the phone with them every week to say like, all right, how can we get the best prices and what’s happening right now?

And they’re like, it’s a disaster because you know, we’re getting bookings from clients. And then we use our capacity on these shipping lanes, all of a sudden, the shipping line cancels or changes or closest down the port. And that we have to agree that price that we agreed with the client and find them another vessel.

And sometimes the price goes up and we make a loss. If you, if you have a good relationship with your freight forwarder, that’s super important. Like the same way we have good relationships with our suppliers, we get better and we’ll choose some better prices, establishing a relationship with your freight forwarders, also very important.

And it can also get you to the front of the line and it can get you on a container in a couple of days if they have, if they have a space. But if all you’ve been doing is giving your freight forwarder abuse saying, why is this late? You know, why is it so expensive? They’re not going to be as willing to help you.

So you can also have to have a bit of sympathy with them as. The other thing, I would say it’s that bulk discounts don’t work here because I was thinking, okay, cool. I’m going to get all my big seller friends together. We all ship a cumulatively 200 containers per month. I’m going to go to a freight forwarder and be like, Hey, rather than those five containers I was doing, here’s two hundreds, give us the best price.

And they’re like, well, that doesn’t work because capacity is issues, but I’d love to take your 200 container booking, but where, where are they arguing about. It’s like the smaller shipments LCLs, the lower container loads. So a 20 foot container can hold like 28 cubic meters at four, if we can hold 56 cubic meters, if you only have like eight CBM or 10 CBM or 15 CBM, they can fit you in into those like little spaces.

So why that’s important is that if you have, let’s say ordered 5,000 units from your, from your supplier or from your factory, you can say, look, I’m only going to ship 2000. I need you to keep 3000 units in storage in your factory. And normally your factory will do this for you free of charge because they have good warehouse and capabilities in the factory.

These factors are normally quite large. And in that way, you’re only paying the shipping costs on the 2000 units. And you’re sort of getting it at those lower containers. And being able to like, like Lego pieces, right? You’re just getting those, like the little gaps and you’re, you’re just going to optimize those in order to get the best price, because they can’t be shipping the full containers.

And another thing that I’ve done, which I find quite successful, it’s gone back to working in partnership with your supplier. Let’s say, for example, you were paying $5,000 for a container before. No to container price is $15,000. It’s gone up 10,000. I’d say to my factory. With this $10,000 costs increase.

It’s no longer profitable for me to ship these products. Therefore, if I ship at this price, I’m not going to make profit that I’m not going to make sales. So I have to cancel this order. However, because the increase is $10,000. If we work in partnership and if we split this cost 50 50, I paid 5k of the increase.

You pay 5k for the increase, then we’d still ship the goods. We’re still profitable. I’ll get sales. And as a result of me getting sales, you get orders. So our business continues as normal and the freight. The suppliers are very much well aware of what’s happening with the freight prices, because they’re faced with these challenges as well.

They’re losing customers because of this. So asking your supplier or your factory. To contribute to, to the cost increase can then greatly bring down your shipping costs, make your products profitable again, and also improve the relationship with your factory as well. And another thing I would say on top of that, as well as it’s important now, more than ever to get multiple quotes from multiple freight forwarders, you may have had this one freight forwarder that you’ve worked with for many years.

And you’re like, oh, they’ve always given me the best price, but I work with multiple freight forwarders. Each one is giving me better price every couple of weeks. And the price is in related to how much capacity they have. So someone might give you a very high price because they literally don’t have any more space.

And someone might give you a very good price because some spaces opened up. So there was no point just to go to one, you want to have maybe four, at least that you quote from.

And then I would say. I have like two international freight forwarders has loved like us freight forwarders. You probably work with, but also there’s some prices from some Chinese freight forwarders as well, because sometimes there that they can also get better prices as well, based on the volume and the scale that they do, but be very, very careful if you work for Chinese freight forward.

There it’s still an fob shipment, meaning you clear the goods through customs yourself, because if it’s DDP, which is direct delivered duty, paid your supplier clearance of goods through customs for you, and why this is, we have to approach of caution is that the the price that they give you for the product also includes the shipping.

And sometimes the price can be quite low and you’re like, oh, well, this guy gives the best price. I’m going to go with them. But what they’ve actually done. Is it they’ve cleared you to a good, a lesser duty rate than what it should be. So if you had 15% duty, maybe they’ve cleared a quote, which is 2% juicy.

And how that affects you is that if you get caught at customs, you could get stuck in and gets paid a fine and pay the balance. And some people had their good stuck at customs for many months. So just, if you do use a supply for DDP shipment, ask them, can you confirm what is the HTS flood, which are clearing these goods through customs for me.
And then that way you can sort of make sure that you’re. And getting the best price as well.

Top 3 Suggestions

Mike McClary: Wow. So there’s three incredibly valuable piece of information you just kind of gave there in that 10 minute slots. I want to kind of make sure I got them all. First one was previously shipped booking entire containers.

Might’ve been at a discount where it’s more expensive to ship LCL or less than now. It’s kind of swapped around because you’re saying that they may have some capacity to fit in these smaller orders and its container. So it might be better to do that. Is that right?

Kian Golzari: Yeah. Yeah. And you can also ask your freight forwarders as well.

Like how can I get the best price from you? Is it when those lesser container loads or is it a full containers? Because the situation is dynamic and it’s changing, but at the current state, yeah, that would be correct. And

Mike McClary: the kind of the world is flipped around there. That’s good to know. And a great, great strategy.

I would not have thought of. So glad we, we did this second one work with your supplier to maybe split the cost, because like you said, you’re seeing suppliers, losing customers. They know the shipping situation. So as long as it’s a win-win for both sides that’s another good option as well to, to get these products

Kian Golzari: shipped out.

Yeah. And the success, the success of that will rely on the relationship, the athletes for factory. So if it’s your first order, it’s very unlikely to get that. But if you’ve done multiple orders, there’s a higher, much higher chance that you’ll be. Okay. That’s,

Mike McClary: that’s, that’s great to know as well. Luckily I have like a really good relationship with my supplier.
We’re going through those conversations right now. So I’m seeing that happens. That that’s also great advice. And then the third one, and I experienced this too. It’s kind of funny. We were talking about this. I used to have one freight forwarder that I’ve known my entire e-commerce career. I’ve used them for everything.

And for the first time, in several years, I’m actually gotten quotes from a couple of different ones. And what I didn’t realize is like, you kind of like, oh, Maya’s to this. It’s not necessarily that my freight forwarder who have a really good relationship, isn’t trying to gouge me. They just don’t have the capacity.

And so me going to someone else where they do, that’s why they’re giving us the prices here, because they can fill the capacity where others can’t. Right. For sure. Cool. So yeah, no, that’s great. Great advice to kind of build relationships with people. You’re right about that. The relationships is such a big part of this business, whether your suppliers freight forwarders kind of even later on building it with your customers down the road, but right now it’s a supply chain issue.

Shipping Prices

So doing those, those three things right there is, is really, really good advice. And then let’s talk a bit more. Fob and DDP. So for people who are not, are just getting involved in the whole e-commerce business, can you explain the difference between fob shipping

Kian Golzari: and DDP? Sure. Yet. And there’s also one more, which we should explain as well.

You have X works as well. So let’s think of it from like the factory, the poor in China, the port in the U S and then deliver it to your final customer X works. We are literally making this product for you and you pick it up from the factory. So whatever freight costs you pay for is going directly to the factory and then moving out from their fob, which is freight on board or free on boards.

It’s the most common type of shipment as my preferred option. That’s what most people do as well. And that is essentially in the price of your product. Your supplier will deliver your goods from their warehouse to their local ports. So if they’re based in Sherman, The goods will be dropped off to your freight forwarders warehouse in the port of Sharman.

And then you pay for the cost, shipping it from the port in China, all the way to either your warehouse or into Amazon or even your home. And then DDP is when the supplier is like, we’re going to cover the cost of that all the way. So that the cost that you pay is for your goods, your input GT, and the cost delivered to your final warehouse as well.

DDP is normally more common. Yeah. You know, if it’s a smaller item and maybe like, let’s say leather wallets for key rings and you’ve ordered like 300 pieces and it can fit in two boxes. The normally send it by air or by courier. That’s probably often, right. Let’s just send it out by DHL or FedEx. And then it’s on the way to you.

But for slightly bigger. Then it’s going to be most likely fob, but it’s quite important to understand the difference between that between all three. And if you ever want to, you know, compare to pricing, you can always ask your supplier for the price. Can you give me the X works, price, fob price, and the DDP price.

And then you can kind of compare. Adding your freight cost onto the unit cost. How, how do they compare? But fob is normally the most common and the best with moving products. That’s awesome.

Mike McClary: I can’t thank you so much for everything today. There’s a ton more than I know we can get into now, but I think I want to save.

For a future podcast with you, you were just a treasure trove of knowledge in this industry. Where are you at by the way? Where are you? You mentioned you’re from Scotland, but is that where you’re at right now?

Kian Golzari: No, right now I’m actually in Dubai. I’m actually moved here like 10 months ago during the, during the situation, I just actually came here.

And then I just thought I really like it here. No lockdown, great weather is tax-free much closer to China as well, only four hours time difference. So I was like, this is ideal. And then just set up everything here. It got visa and then just never went back to the.

Mike McClary: There’s a theme. You moved to play.
You, you visit places that you like and you end up living there. So we need to get you to visit Austin again and see if that might happen.

Chinese New Year

Kian Golzari: I have to come back to Austin. Now. I’ve been a couple of times I had nothing but great memories. So by all means I would definitely love to come back. One final thing I would mention too, is quite important that we need to consider right now is the Chinese new year is on the 1st of February because of that, the factories and the ports tend to close down the month before.

So there’s not going to be much movement of products or shipments in January. Therefore, if you need to get orders out before to end the year before four, you have to start planning those shipments now because November and December are stuffiness start to get even busier than they are now, and probably even more expensive as well.

So definitely start to plan out your shipments for Q1 Q2 next year. Right now.

Mike McClary: That’s great advice. And then what about art? There’s some similar shoes after Chinese new year is over the everyone’s trying to manufacture and get product shipped out as

Kian Golzari: well. Yeah, exactly. Because we’ve just had this like.
Of a lack of shipments. Now there’s a pile up again, but you know, luckily being involved in this business for so long, I haven’t had like too many quality issues with the products. But what I can say is whenever I have had a product quality issue, it’s always been the goods which have been manufactured either right before Chinese new year or right after Chinese new year.

And the reason is that right before Chinese new year, the workers in our rush to be like, okay, I’ve got 10 orders left before we’re done for the holidays. They kind of rushed the production. Shipped them out. So for anyone who doesn’t do appreciate inspection Q4 is the absolute best time to do it because they’ll spot any potential issues that your products may have, which were rushed.

And then on the flip side because the factory workers is often like a people migration, they come from different areas in China to then work to that factory. Let’s see if you worked in an electronic factory making webcams and then in Schengen. And then you’re like, actually I really fancy making.

That dovey blankets or bedsheets. There’s a factory in the north, slightly nicer area. They pay a little bit more. I’m going to make bedsheets this year. They’ll go to another factory, but they’ve just been making cameras a year before. So now it needs to be trained how to make bedsheets. So to get thrown onto the production line, they get trained a little bit, but it’s the first time I’m making this item.

So again, you can watch out for quality issues right after Chinese. And this doesn’t happen all the time because you know, sometimes they have the regular workers that come back and, but it happens as well enough and I’ve seen it. So any shipments are going out just for Chinese new year or right after Chinese new year.

Definitely get your appreciate and inspection. Get the shipment approved by a third-party before you ship anything out.

Mike McClary: You brought that up. Those are two great tips right there. Make sure you get some orders in. So they’re shipping. For the port shut down for Chinese new year and we have anything being manufactured right before or right after definitely make sure you have those inspected, cause those are the higher chances of having some kind of product related issues.

Absolutely. Awesome. Well, Ken, thank you so much for joining us today for the branded podcast. If people want to reach out to you and take advantage of your expertise how can they do that?

Kian Golzari: Absolutely. So I do have a YouTube channel called sourcing with Keon. Videos out, just all about sourcing and same.

I have a Facebook group of the same name as well. So I’d encourage you guys to join that as well. I’m on Instagram, which is Keon underscore G G a, and I’m also been working on something very, very special building out a sourcing platform which I’ll share more information about, but that’s in collaboration with Taitan and there we’ll have some really cool news and offers for you guys coming up soon as well.
And that’s the title?

Mike McClary: Well, awesome. Excited to hear about that. And hopefully I will see you next month. This will probably be drop this episode sometime in October. Probably see you down in Orlando in November at the Titan event.

Kian Golzari: Can’t wait Mike looking forward to it and looking forward to seeing you!

Mike McClary: all right.

Thanks so much. And thanks everyone for joining us today on the branded by amazing podcast. If you have any questions for Matt or I or for Keene or for anyone. Feel free to drop them below here or to shoot an email to us@amazing.com. So thanks so much and we’ll see you in the next episode.

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